Are third parties the answer for optimizing deliveries?
Increasingly demanding consumers are turning to third-party delivery, rather than going directly through a brand or retailer, for more trusted delivery options, according to a survey from Acquity Group.
The survey of more than 2,000 U.S. consumers found 66 percent more likely to order from a company offering faster delivery while 87 percent preferred ordering from a company offering delivery transparency (i.e., updates on delivery time and method).
Asked which delivery services they used, 73 percent said standard delivery from a third party service (such as GrubHub); 63 percent used standard delivery from a retailer or grocer; 46 percent used expedited delivery from a third party service; and 51 percent used BOPIS (buy-online, in-store pickup.). Sixty-four percent would pay a premium for faster delivery, with 39 percent saying they would pay more for same-day delivery (the most popular option).
Acquity, an Accenture-owned digital marketing and e-commerce consulting business, said, "tapping into third-party partnerships to facilitate" speed and transparency "may be a winning strategy." Seventy-five percent were open to receiving deliveries from third parties rather than ordering their products directly from a retailer. However, adoption is just beginning, with 12 percent using services such as Postmates to receive an item from a company that doesn’t ordinarily offer delivery.
Source: GrubHub.com
Acquity wrote in the report, "As the sharing economy and crowdsourced businesses take off, businesses that recognize where a partnership fits into their overall brand strategy can benefit by expanding their offerings and helping consumers get the products they want, exactly when they need them."
The survey also detailed delivery risks, with 52 percent of respondents blaming the brand or retailer the product is ordered from — rather than the shipping company — when a delivery fails to arrive on schedule. Of those who indicated a package hadn’t arrived on time, 63 percent said it influenced their future shopping with that company in some way.
Among the respondents making adjustments:
- Thirty-seven percent switched to a faster shipping method;
- Twenty-three percent did not order directly from that company again;
- Fourteen percent ordered the same products from a different company;
- Fourteen percent ordered further in advance.
Discussion Questions
Are third-party partnerships more likely to enhance or complicate delivery for retailers? What do you think of their potential to add more speed and transparency to delivery for consumers?
Poll
BrainTrust
Keith Anderson
Founder, Decarbonizing Commerce
Doug Fleener
President and Managing Partner, Sixth Star Consulting
Does this survey give us any new information? Consumers like to have quick delivery and like to know where their package is in the process. Will this stop them from placing orders with companies that do not offer these features? Not if the price is right.
Third-party last-mile logistics providers tend to offer shoppers the most breadth of selection, transparency and a consistent transactional experience. Economies of scale give them logistical efficiencies too.
For retailers, the key questions are: 1.) What data will be shared by each party? 2.) What are the economics of the transaction? 3.) How can each party market to the shopper?
For many retailers, partnerships are the best pathway forward — provided they read the fine print and negotiate.
Clearly the answer depends on which third party we are talking about. But assuming competency, the answer seems to be that logistics companies are good at logistics and retailers are good at selling things, so — as a general rule — retailers ought to leave “last mile” logistics to somebody who a.) can fulfill an order and keep a customer happy and b.) knows how to run last mile delivery at a profit.
Delivery is, after all, the business of these third parties and so the end result of employing them ought to be an improved customer experience. And what do customers really like? Oh yes, speed, transparency, reliability and reasonable delivery costs.
Logistics and import/export circumstances will deny opportunities to explore third-party opportunities by the big e-tailers and retailers. Small business and the food services industries will use these opportunities to grow sales receipts and slowly to develop same-day opportunities. Their size and drastically downsized middle management teams will continue to allow the 21st century delivery demands to suffocate growth for companies like UPS, USPS and FedEx. Commercial airlines and large trucking companies would be wise to find a way to work with the newer and smaller full service shipping businesses to find faster and cheaper shipping costs for consumers.
For now and the near future the way to win retail sales is price and delivery. Shipping costs are and will remain more than half of this equation. Those that can manage the costs from the manufacturer and to the customer will be in the best place to win their share. The real key to get everyone together is the search engines that all will use to find one another as well as the financial companies that enable payment. The bank cards and e-tailers in commanding positions with their pay-to-win pricing will be severely troubled by some of the newbies within the next three to five years. Some of the internet service suppliers are seemingly aware of this and aligning themselves to move in.
Speed and transparency are great, but you still have to deliver on the brand promise. Any time you use a third party, you do give up some control.
I currently have a client who isn’t yet big enough to do their own deliveries, but the third party is falling short of expectations. This is having a negative impact on the retailer’s customer experience.
The key is to make sure the third party is adding value to the customer’s experience.
I’m not certain the findings in this survey show any new news, however I suppose there is a value to confirmation of what our beliefs may be. I also believe that companies should focus upon their core competencies. So if a company has not optimized delivery to state-of-the-art levels, third-party organizations can definitely be leveraged to their advantage. Also, the third-party specialists are typically more adept at providing the transparency and agility to deliver based upon evolving consumer demands.
Retailers need to include delivery as one of the services that impacts customer satisfaction regardless of who does the delivery. No matter who does the delivery, perceptions of delivery satisfaction and brand attributes are to the company from which the product was purchased. Third party solutions may provide an answer for some if not many retailers, but they need to monitor the service provided. If not, and customers are dissatisfied with delivery, the perception of the retailer will suffer.
Delivery is certainly an important factor. But do we really care what the method of delivery is, as long as it is timely and reliable?
I agree with the poster who said giving up control to a third party is key. Safeguarding the retail brand is the top priority. Bad service by a third party will come back to damage the retailer. Pick the partner carefully.
Well, it’s better on paper than doing it yourself, but the brand factor is the big question to me. A good model to look at is Geek Squad for Best Buy. They enhance the experience AND deliver the goods — a great idea. Even with that left-handed case study, though, you have to select not just any random Uber driver that comes along because they actually represent YOUR brand — they don’t have one! This is going to get very interesting going forward. Walmart trucks? Hmmm, they already have them, right?
Operating multiple, parallel proprietary delivery mechanisms is inherently inefficient. This is why USPS, UPS and FedEx add value as common carriers – they consolidate shipments from many sources on a single truck.
Grocery delivery is a special instance, however, requiring temperature control and narrow delivery windows. Running your own vans is the only way to make that work. Shoppers will either accept the added cost or opt for a click-and-collect alternative.
For all categories, shipment transparency is a new expectation, I think. Adding a delivery tracker plug-in to a commerce site or app is probably a requirement, especially for e-tailers who use more than one shipping company.
Same-day delivery is a luxury feature, from my perspective. For the customer that has that requirement, it makes sense to use a specialized third-party delivery service and pass along the cost.